L&T seeks three Mindtree board seats; Wipro to lose two long-serving execs: Reports

L&T seeks three Mindtree board seats; Wipro to lose two long-serving execs: Reports
Photo Credit: Photo Credit: Reuters
18 Jun, 2019

Larsen and Toubro (L&T) has written to Mindtree seeking three seats on its board as the engineering giant presses ahead with the first hostile takeover in India’s IT services segment, according to a report in The Times of India. 

L&T is currently the largest stakeholder in Mindtree with around 30% stake and is aiming to increase its shareholding to more than 60% via an open offer that commenced on Monday.

L&T can currently only appoint independent directors to the board and it will push to get promoter status once the open offer concludes in order to exert more control, the report added.

According to the report, L&T’s missive turns up the heat on Mindtree’s founders who, along with largest institutional investor Nalanda Capital, have been asking for a better deal from the conglomerate following the hostile acquisition.

The four founders together own 13% in Mindtree, whereas Nalanda holds about 11%.

Two Wipro board members set to depart

Wipro is set to lose two members of its board as lead independent director Narayanan Vaghul and chairman of the board’s nomination and remuneration panel Ashok Ganguly will retire next month, according to a Mint report which cited a company executive it did not name.

Both Vaghul and Ganguly have worked at Wipro for more than two decades. The duo had been re-appointed for a three-year term in 2016. Their tenure will end on 31 July, when chairman Azim Premji will also retire after 53 years at Wipro.

Wipro had appointed State Bank of India Ltd Arundhati Bhattacharya as an independent director in January and reappointed independent director Ireena Vittal for a five-year term last October.

Wipro’s eleven-member board comprises three executive members, including Azim Premji, Rishad Premji (who will take over as managing director), and chief executive Abidali Neemuchwala, besides eight independent directors. The current term of the six other directors continues till 2021.

Boom in optical networks 

The market for gigabit passive optical networks (GPON) in India is expected to grow at a compounded annual rate (CAGR) of more than 39.4% between 2019 and 2025, according to a report by 6Wresearch.

GPON a telecommunications technology used to provide fiber to both domestic and commercial consumers.

The report said that the increasing number of internet users coupled with surging internet and broadband penetration in India is boosting the growth of the GPON market in the country. 

The rising demand for high-speed internet, high bandwidth demand as well as introduction of triple-play service are further driving the growth, it added.

6Wresearch revealed that government initiatives such as its smart cities project and BharatNet are accounting for rapid development of fiber optic networks. 

With 5G services set to launch in the country, the demand for efficient backhaul technology in the telecom sector is projected to rise sharply which would further fuel the growth of the market during the forecast period, the report added.